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Value Proposition

Date November 2012

Price 3.25p

Market Cap £2.74m

Code AME

Listing AIM

Shares in issue 84.2m

November 2012

Introduction

Overview

Gold exploration company, African Mining & Exploration (“AME”) was admitted to AIM in November 2010, with licences in western and southern Mali. The majority of licences are located on the Kenieba Inlier, hosting the Birimian rocks that are responsible for much of West Africa’s prolific gold production. As noted in the recent interim results AME had £2.3million in cash at the end of September 2012 and is thereby fully funded through the next 18 months or so of operations. The Company has significant in-house exploration capabilities and has carefully selected its areas of exploration.

Although Mali has been in the news, as a result of March’s coup, AME has continued its operations with minimal disruption. Their licence areas are located in the South and South West of the country, over 650km away from the troubled North East, where local communities provide a high level of support for the Company’s operations.

AME originally listed with two licences in Karan and Diatissan. Early exploration at both these licence areas did find extensive mineralisation, but not of a sufficient grade to allow delineation of a mining resource. However, the information gleaned from this work has enabled the Company to redirect its efforts and adjust operational plans with a view to identifying more substantive mineralisation.

Significantly, in July 2012, the Company announced the acquisition of seven additional licences from privately-held Caracal Group. This acquisition represents a significant step change in the depth, diversity and prospectivity of the Company’s operations.

AME is now embarking on an extensive exploration campaign across its licence portfolio.

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AME represents an “Option” on leading-edge Malian gold exploration, through a well-funded company with a depth of management and in-house drilling capability all methodically working to deliver early exploration success.

Value Proposition

• At the end of September, as outlined in the Interim Results 2012, AME had a cash balance of £2.3million; sufficient cash runway for in excess of 18 months under current operational plans;

• Originally listed with two licences, Karan in southern Mali and Diatissan in western Mali. Both licence areas have been the subject of work by the Company, with the data collated used to refocus exploration activities on the ground;

• On July 3rd, AME announced the acquisition of the Caracal Gold Mali exploration licences, covering approximately 376 km² of western and southern Mali;

• Five of these licences are contiguous and are collectively referred to as the “Kossanto” licences. These are in the West of Mali and are AME’s current primary focus. AME has a notable amount of historical data from previous exploration activities in Kossanto and is currently reanalysing this and supplementing existing data through its own efforts in the field;

• The other two licences, Donbaleya and Daounabete, are separately located in West and South Mali. These are far less developed than Kossanto, but they do represent “virgin” territory, which is rare in Mali, such is its rich heritage of gold resource discovery and production;

• The Company has launched an 18-month exploration campaign in Kossanto budgeted at $1.5million, which is fully funded by existing cash reserves;

• The Company has assembled a highly experienced and capable management and technical team, with experience of in-country and regional exploration and business development.

• AME’s in-house exploration capability consists of a seasoned team of Malian and expatriate geologists supported by its wholly owned RAB & Auger drilling equipment as well as the Company’s ground geophysics equipment. The Company operates a rapid deployment logistics structure, loosely based on that of the British Army using ex-Army mobile camp equipment for field surveying;

• The Company has the desire and financial strength to further diversify with potential acquisitions outside of Mali. Opportunities are reviewed regularly and news flow from this area remains a constant possibility.

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Details of the Board and Senior Management team below further details available on the Company’s website.

AME’s Management

Stephen Oke – Non-Executive Chairman

Stephen has 35 years’ experience in the mining and metals industry. He has held senior positions in the investment banking industry and has a BSc Honours degree in Geology from the University of Southampton and an MBA from the University of the Witwatersrand Graduate School of Business. He currently is on the boards of International Ferro Metals, Kolar Gold and Shaft Sinkers

Mark Jones - Chief Executive Officer

A graduate of the Camborne School of Mines, Mark is a mining engineer with 30 years’ experience in Mining with Anglo American Group and associated businesses including explosives and heavy industrial equipment, 21 of them in Africa. He has global exposure to mining with specific expertise in gold and base metals in Zimbabwe, South Africa, South East Asia, Central Asia and Europe. He is currently a non-executive director of Aurum Mining plc and Tulpar Gold plc.

Douglas Chikohora – Non-Executive Director

Douglas is a chartered engineer with over 30 year’ experience in the mining industry. His experience covers rare earth minerals and base and precious metals with various companies including Cluff Resources, which he joined in 1987 and where he was in charge of the exploration and development of the Ayanfuri mine in Ghana. After the acquisition of Cluff Resources by Ashanti Goldfields Company Limited in 1996, he joined Cluff Mining Limited (now Ridge Mining Limited) in June 1996 before being appointed Managing Director of Cluff Mining (West Africa) Limited, responsible for its West African gold interests. He is currently a director of the Business Council for Africa, CEO of Cluff Africa Associates and a director of Anglo African Agriculture plc.

Roger Williams – Non-Executive Director

Roger, a UK citizen, is a UK and South African chartered accountant with over 20 years’ international experience in mining finance. In 1997 he joined Randgold Resources working on its London Stock Exchange listing and its later secondary listing on NASDAQ, where he was appointed Group Finance Director in 2002. From 2002 to 2007 he was part of the management team that oversaw its expansion, raising debt finance, managing its treasury operations and assisting on M&A and new business. He is a non-executive director of 2 other London listed companies, Shaftsinkers plc. and Sylvania Platinum.

Michael McGarty – Chief Financial Officer

A graduate in Finance from Manchester University’s Business School, and a qualified management accountant. He gained 16 years of experience working with Ingersoll Rand (NYSE:IR), a leading global diversified manufacturer of industrial and engineered products. During which time he has worked in roles of increasing responsibility, covering all areas of accounts payable / receivable, and financial / management accounting. He led the European implementation of the Sarbanes Oxley compliance initiative, and has served for 7 years as financial controller for businesses covering Europe, Middle East and Africa, including the provision of business partner support and strategic planning.

Rasmané Kaboré – Head of Exploration

Rasmané, a master’s graduate in Fundamental and Applied Geology from the University of Ouagadougou in Burkina Faso, has extensive experience gained from roles of increasing seniority in mineral exploration in West Africa.  His experience has been gained in orogenic deposits, managing exploration programmes for gold and base metals.  As regional exploration manager for Volta Resources he was instrumental in the discovery and the definition of a number of precious and base metal prospects including the Nassara Gold Project. He attained the level of Master in Mining Project Evaluation from Cespromin, Paris School of Mines and is a member of Anciens Stagiaires du CESMAT. He holds additional qualifications CESMAT and the Centre for Geosciences in Fontainebleau and has been involved in mineral resources estimation, mine scoping studies, property evaluation and QA/QC.

Dominic Doherty – Regional Manager

Dominic was awarded a Queen’s commission from the Royal Military Academy Sandhurst, retiring as a Captain after serving 8 years as an Officer in the British Army. During a distinguished Army career he was involved in combat and service operations throughout the world, including Europe, North America, West Africa and the Middle East. He is professionally trained in information and intelligence gathering and analysis and holds a degree in Law from Exeter University. During service in Sierra Leone Dominic forged a strong bond with West Africa. As one of the founding partners of Roc Resources, Dominic developed an alluvial gold opportunity in Mali which he managed for 2 years. Prior to that he was Head of Business Development for the Government of Dubai, and took a leading role interfacing with African Producers for the UAE Government’s “Masterplan for Diamonds” and enabling the Kimberley Process in Africa and the Middle East. 

Mike Johnson - Consultant

(Emeritus) Professor Mike Johnson was previously the Director of Environmental Science and the Botanic Gardens at the University of Liverpool. He was Chairman of Glebe Mines Ltd (2000-2008) and is currently a Director of Empire Mining plc. Professor Johnson presently holds a number of business and environmental advisory positions including with Rio Tinto plc, New Boliden SA and Lundin Mining Corporation, and is an adviser on sustainable development programmes for several governments, UNEP and the World Bank.

Chairman

CEO

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Exploration

Exploring for gold in Mali

HQ

KSCO

NE

OK

Senegal

Guinea

Mali

Ivory Coast

Kossanto

Diattisan

Karan

Donbaleya

Daounabere

Birimian Greenstone

Protorozoic Granites

AME Projects

Producing Mines

KEY

Mali is Africa’s third largest gold producer and gold is the country’s third largest export, after cotton and livestock. The Coup in March attracted much negative attention to the country. Whilst political conditions continue to remain strained, it is important to appreciate the practicalities of the coup, its aftermath and how this has affected the Company.

Mali is a country of immense size, in terms of land mass it is significantly larger than France. The country, post-coup, is now split into two distinct areas; the North East, where the rebels hold many key towns including the historic town of Timbuktu, and the South West where the capital Bamako is located and the Malian Government is in control.

AME’s gold operations, and those of larger players like Randgold Resources, are located in the government controlled South West of the country.

In the immediate aftermath of the coup, there were some disruptions to the field operations and office activities in the capital Bamako. Conditions on the ground have since improved though still remain somewhat fractious. In spite of this, AME’s operations have continued reliably well and to the most part unhindered.

This can be attributed to a number of factors. Firstly, it should be noted that there is a substantial distance between the area of gold operations and the nearest rebel held territory. In this regard it is noteworthy that Randgold recently announced record production results from its Loulo Gounkoto Malian gold production plant. AME has also taken contingency measures to ensure they continue to maintain adequate supplies, including fuel.

Operationally they are highly self-sufficient and own much of their own equipment including RAB & Auger drills and ground geophysics equipment.

Meanwhile, the Government is working to improve security in the South West whilst seeking to mobilise international support to oust the rebels from the North. On October 24th, the African Union (AU) lifted Mali’s suspension from the bloc, saying an African plan to intervene militarily to help the country claw back territory from Islamist militants would be ready within weeks. The body has also endorsed a plan calling for fresh elections and the return of law and order to the North East of the country.

BAMAKO

200km

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In terms of gold prospectivity, within Mali’s borders are some of the most prolific geological structures in West Africa.

• High concentrations of Birimian rocks are present across the region, which are West Africa’s major source of gold and diamonds. These formations are named after the Birim River and have ensured that Ghana and Mali are respectively Africa’s second and third largest gold producers;

• This Birimian Formation is characterised by major shear zones. In layman’s terms a shear zone is analogous to an ancient geological fault line. As the pressure of continents drifting into one another built, this would find release along contours of weakness, often in the presence of volcanoes;

• These contours are referred to as “gold bearing shear systems”. Again, in layman’s terms, when volcanoes erupted or earthquakes occurred they force to the surface mineral deposits which had previously been locked much deeper in the Earth’s mantle;

• Some of Mali’s largest deposits have been found along such gold bearing shear systems, including:

• The Yatela and Sadiola mines. These mines are operated by AngloGold Ashanti and share ownership with IAMGOLD (40%) and the Malian Government (20%). Over 18MOz of gold has been discovered at Yatela and Sadiola;

• The Loulo mining complex, which includes the operation at Yalea. Operated by Randgold Resources, ownership is shared with the Malian Government (20%). This mining complex has yielded discoveries in excess of 10MOz of gold;

• The same gold bearing shear system has also provided the Gounkoto mine, which Randgold has rolled into its Loulo operation. This added a further 3MOz of gold to Randgold’s project in western Mali. The latest results for mining at Loulo and Gounkoto can be seen here;

• All three deposits occur along the same gold bearing shear system and all three deposits occur within the same volcano-sedimentary rock as present in Kossanto.

As the map shows, AME’s projects can all be found within these prolific geological structures.

Mali has an established and reliable Mining Code, dating back to 1991. This is based on French law and upon which the country’s long uninterrupted history of gold production can be attributed.

Three year exploration licences are issued and these can be rolled over twice, each for a further three years, meaning an exploration company has nine years to complete its work. On discovery of a commercial deposit the exploration company has the pre-emptive right to purchase the exploitation rights. If exploitation rights are activated, the company needs to restructure allowing the Government to take an automatic 10% stake and the right to acquire a further 10%.

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Caracal AcquisitionAnnounced to the market on 3rd July 2012, the Caracal Gold Mali acquisition included seven licences, for an initial consideration of £62,500 and a further £62,500 became payable when receipt of formal Government approval for the transfer of three of the seven licences was received.

The Company has designed an exploration programme for these licences with a budget of $1.5million over 18 months. At the end of this period AME, at its sole discretion, can either pay £1.25 million to the vendors, in cash or shares, or alternatively elect to give Caracal Group first right of refusal to reacquire Caracal Gold Mali on a cash free debt free basis. Assuming the share price is strong, we would expect this payment may to be made in shares.

Should the Company decide to make the £1.25million payment and subsequently delineates a Proven and Probable reserve of at least 500,000 ounces of gold they would be liable to allot Caracal Gold LLC 3,515,000 million shares to reflect the magnitude of the discovery.

The structure of the deal reflects the current low valuation of AME shares and need to focus cash reserves on exploration work rather than corporate transactions. It enables the Company to prove up the prospectivity and defer the bulk of the consideration until more assurance as to resource potential has been gathered on the ground. It also reflects the vendor’s confidence in AME’s core exploration competence.

OperationsAME’s geological team is based in Bamako, Mali’s capital and comprises both local and expatriate geologists. From Bamako they can be rapidly deployed into an area to conduct exploration work.

The Company has also invested in its own drilling capability. It possesses a highly mobile 4x4 drilling unit, which is all terrain and can conduct both RAB and Auger drilling. The drilling team has ex-Army field camps and is capable of gathering field data, drilling to depths of up to 100m. Additionally the Company has invested in ground magnetic geophysics equipment to allow improved target identification through detailed structural interpretation.

This team is able to operate during seasonal periods of rain, which extends the possible duration of exploration campaigns. Samples for testing can be delivered to accredited laboratories across West Africa, with whom AME has long-standing strategic relationships.

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ProjectsKossantoThe Kossanto licences comprise five contiguous licence areas (Gourbassi, Kobokoto, Farikounda, Koussikoto and Kobokoto-Est). The 207km² Kossanto is situated in the middle of the Kenieba Inlier. Artisanal gold production is present across this area.

Mali has very little virgin ground in gold exploration terms, so AME followed a very specific set of guidelines in order to find new projects. Led by their technical team they identified the Caracal licences as an attractive target.

With the benefit of local knowledge, they looked for licence areas within known geological hotspots, where exploration work had already been conducted, and where the terrain would suit their flexible operations. There was also some good fortune regarding timing; the vendor having gold projects across West Africa, and seeking to divest all of these.

The Kossanto licences are at different stages of maturity and none expire before the 2nd of January 2014 deadline (re AME’s second instalment decision point).

Ultimately the key question is – what is the chance of making a company transforming gold discovery?

The acquisition brought with it a significant amount of geological information based on ground mag surveys, Induced Polarisation surveys, soil sampling, trenching and over 7000 metres of RAB and RC drilling. From this, AME’s geologists identified three clear targets at Gourbassi West, Gourbassi East and Massakama. At the first two there is apparently clear “resource potential” and at the latter there is “strong exploration potential”. On 5th November the Company released an update to the market confirming positive check assay results on previously reported significant mineralisation at Kossanto, yielding significant savings through the validation of existing data and avoidance of a need for confirmatory drilling. The confirmation of grade and intercepts included a peak result of 29.2 g/t Au and the prospect now moves into the resource definition stage.

Gourbassi East and West each have clear mineralised trends, which extend for over a kilometre and also splay in different directions. Both targets are open strikes in both directions and AME’s primary focus is to assess each target in the near term. To date most work has been undertaken at Gourbassi East, however work undertaken by AME has revealed that it is Gourbassi West that could offer the best opportunity of discovering a gold resource in the short term.

At Gourbassi East, despite heavy rain, by the end of August they had completed the first holes of a 4 fence RAB drilling plan. The fence RAB drilling plan is used to measure the width of a strike and is a key step in proving up the extent of a possible resource. So far, historical results supplemented by the work undertaken by AME have demonstrated the presence of gold mineralisation. The current strike length has been measured at 900m, but this looks likely to increase being open along strike in both directions.

Gourbassi West lies 3.7km to the West of Gourbassi East. The licence area was originally identified through a soil geochemistry study that confirmed anomalous gold values, followed by an Induced Polarisation study. This was followed up with RC drilling and significant mineralisation was encountered with peak instances including 17m@2.05g/t. 9m@3.06g/t and 6m@1.8g/t. The strike length here is almost 1km and is also still open along strike in both directions.

The Company will continue with a 50 line kilometre ground magnetic survey, followed by multiple RAB fences to test length and width of both strikes at the two Gourbassi licences, after which a 5000m RC drilling campaign is planned. The Company is currently in negotiations with RC drilling contractors and drilling is expected to start in November. In the meantime they are working to improve the road access to Kossanto which was damaged during the rainy season.

Meanwhile at Massakama work will continue to help build an understanding of the high grade mineralisation structure, which has been previously discovered. Previous trenching and RC drilling discovered certain high grade gold results including 16m@9.5g/t and 8m@18.5g/t just below surface.

It is too early to say how significant the latter Massakama results are, but if they can be consistently repeated, this also offers the prospect of a material additional discovery. Detailed geological mapping is now planned as there is correlation between mineralisation and magnetic lows elsewhere in Kossanto. This could well give an indication that there is more to be discovered here, when AME is able to apply resources to undertake detailed work on the ground.

For more information on AMEwww.miningmaven.com

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Projects

Diatissan

The Diatissan licence covers 16km², which is to the East of Kossanto on which the Company has undertaken 872m of RAB drilling. This drilling did not uncover a commercially viable discovery, with low grade mineralisation of up to 0.4g/t. However it did demonstrate the presence of gold mineralisation with an associated hydrothermal system providing an enhanced knowledge of the local geology.

Donbaleya & Daounabere

Secured as part of the Caracal deal these are both virgin prospect located within geologically significant formations associated with gold production. Donbaleya is just to the South of Kossanto and Daounabere is located in the South of Mali.

Karan

Located 90km South West of Bamako work is still ongoing at the 250km² Karan licence. Historically there have been high levels of artisanal mining in the area and in April AME started and finished an Auger drilling campaign to test the local saprolite rocks. The results of this confirmed that gold values discovered in soil samples originated from a bedrock source. Further geochemical and soil sampling is now planned as well as RAB drill fences of the previously RC drilled zone to test the concentration of mineralisation. Within Karan licence area the Company also has a licence access and data sharing agreement with Newmont Mining, and has benefited from data made available from Newmont’s work within AME’s area.

Other licence areas

Although the main focus is Kossanto exploration the Company also retains its original licences at Karan and Diatissan, and also Donbaleya and Daounabere, which were acquired within the Caracal transaction.

RAB Drilling at Diatissan

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FinancesCompany Funding

As of the end of September 2012 the Company had £2.3million cash at bank and budgeted a spend of $1.5million on the Kossanto exploration campaign.

Upon admission to AIM the Company issued 70,811,500 warrants (the “2010 Warrants”) allowing the holder to subscribe for one ordinary share at 12.5p each per exercised warrant, until November 1st 2012.

During 2011 12,861,507 of these warrants were exercised, giving the Company £1.6m in cash. As of 31 December 57,949,993 warrants remained unexercised. Following approval at a Warrant Holders meeting on 26th October AME has recently extended these warrants by a further two years. This successful extension will give the Company the potential opportunity to raise up to £7.2m with minimal fundraising costs, although to achieve this, the Company will need to be successful and secure a significantly higher share price to encourage warrant conversion.

Expected NewsflowThe next 6 months should see efficient and effective development of AME’s projects and the following news is anticipated;

• Results from the initial Gourbassi East and Gourbassi West exploration programme;

• Commencement of follow up 5,000metre RC drilling campaign in November at Gourbassi East and Gourbassi West;

• Exploration updates from work undertaken at Karan;

• Potential news flow relating to new acquisitions.

News

2012/13

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Copyright © MiningMaven 2012.

All figures quoted have been obtained from the respective Company websites with links provided where available. Errors & omissions excepted.

This summary represents the views and opinions of MiningMaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation to buy shares in the company. All opinions expressed are those of the author/s and unless otherwise stated, should not be construed as being made on behalf of any featured Company. From time to time MiningMaven principals may take equity positions in companies. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

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AME’s business model and strategic vision is noteworthy. The Company draws on a senior management team with a significant depth of regional, geological and commercial knowledge and experience. On the ground their rapid deployment capability and strong connections in country mean they can operate efficiently with a high degree of flexibility, over most terrains and through most weather conditions.

With an 18 month cash runway, the Company is exploring for gold in one of West Africa’s most prolific regions and their contiguous licences at Kossanto offer a highly prospective foundation based on interpretation of historical data. Their primary focus will now be to explore this area and they have identified two attractive targets at Gourbassi East and Gourbassi West, which are both open strike and potentially extend over 1km each. With additional potential at Massakama, the Kossanto drill campaign could yield significant results within a relatively short period of time.

With a market cap of just £2.74m, much of which is covered by its £2.3m cash reserves, highly prospective contiguous licences and a fully funded comprehensive exploration program now underway, investors may want to take a closer look at AME.

Disclosure: Members of the MiningMaven team own shares in African Mining & Exploration

Summary